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Heitmann v. American Family Mutual Insurance Co.

Supreme Court of South Dakota

July 20, 2016

BRODY HEITMANN, Plaintiff and Appellant,
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant and Appellee.

          CONSIDERED ON BRIEFS ON MARCH 21, 2016

         APPEAL FROM THE CIRCUIT COURT OF THE THIRD JUDICIAL CIRCUIT CODINGTON COUNTY, SOUTH DAKOTA THE HONORABLE CARMEN A. MEANS Judge

          NANCY J. TURBAK BERRY SEAMUS W. CULHANE of Turbak Law Office, PC Watertown, South Dakota Attorneys for plaintiff and appellant.

          TIMOTHY A. CLAUSEN RYLAND DEINERT of Klass Law Firm, LLP Sioux City, Iowa Attorneys for defendant and appellee.

          KERN, Justice

         [¶1.] An individual injured in an incident with a handgun obtained a judgment against Shooter. Injured also obtained, by stipulation, an assignment from Shooter of Shooter's right to enforce coverage under an insurance policy. Injured filed a declaratory judgment action in circuit court against insurance company, seeking a ruling that Shooter was an insured under the policy. Injured and Insurance Company filed cross-motions for summary judgment. The circuit court granted Insurance Company's motion, finding Shooter was not an insured and dismissed Injured's action. Injured appeals. We affirm.

         BACKGROUND

         [¶2.] On May 1, 2013, Dusty Groom and Brody Heitmann were in Dusty's truck in the Britton High School parking lot. Dusty had a handgun, which discharged, shooting Heitmann in the head. Heitmann survived and sued Dusty to recover compensation for his injuries. In December 2014, Heitmann and Dusty entered into a settlement agreement. Dusty confessed to a judgment of $1, 100, 000 for compensatory damages in favor of Heitmann. Pursuant to the settlement, Dusty agreed "to assign to Brody Heitmann any and all claims or related causes of action [Dusty] may have against American Family [Mutual Insurance]" under an insurance policy issued to Dusty's grandmother Bonnie Buhl.[1] Heitmann also agreed that he and his heirs would not "execute against or otherwise seek to collect . . . the judgment entered against Dusty [personally.]"

         [¶3.] In February of 2015, Heitmann filed a declaratory judgment action against American Family. Heitmann sought a ruling that, on the date of the shooting, Dusty was an insured under Buhl's policy for purposes of liability coverage. As Dusty's assignee, Heitmann also sought damages for breach of contract and for American Family's alleged bad-faith refusal to defend and indemnify Dusty under Buhl's policy.

         [¶4.] American Family had issued Buhl a farm/ranch insurance policy (the Policy) for the period of March 15, 2013 to March 15, 2014. The Policy insured land and a farm house owned solely by Buhl. Section II, Coverage E provided personal liability coverage with a $1, 000, 000 (one million dollars) policy limit. Tammy Groom, Buhl's adult daughter, resided on the insured premises with her son, Dusty. Buhl lived on a separate farm, not insured under the Policy, with her husband Jerome. The Policy defined Buhl as an insured and provided that "Insured also means your spouse and relatives if residents of your household. It also means any other person under the age of 21 in your care or in the care of your resident relatives."

         [¶5.] During the course of the lawsuit, the parties filed cross-motions for summary judgment. No material facts were in dispute. The parties agreed that Tammy and Dusty resided on the insured premises at the time of the shooting, that Tammy and Dusty are Buhl's relatives, and that neither Tammy nor Buhl resided with Buhl in her home off the insured premises. The parties also agreed that Dusty was under the age of 21 and in Tammy's care at the time of the incident.

         [¶6.] The competing motions centered on differing interpretations of the Policy with the parties agreeing that the only issue was whether Tammy was a resident relative under the Policy. The circuit court found that, because Tammy and Dusty did not reside in Buhl's home at the time of the incident, Tammy was not Buhl's resident relative. The court held, therefore, that Dusty was not an insured under the Policy, and that American Family had no duty to defend or indemnify him. The circuit court granted American Family's motion for summary judgment and dismissed Heitmann's claims.

         [¶7.] Heitmann raises one issue on appeal:

Is a relative of the insured residing on the insured premises, and not in the household of the insured, a resident relative under American Family's policy?

         STANDARD ...


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